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What Is a Retirement Annuity?

By U.S. News & World Report

An annuity is an insurance product that can provide income, growth or a degree of protection against investment losses, depending on how it is structured. In exchange for a lump-sum payment or a series of contributions, the insurance company agrees to provide future income payments or grow your savings over time under the terms of the contract.

The variety of annuity structures can make them more complex than other fixed-income products. “While CDs and Treasurys typically offer a guaranteed interest rate for the term, annuities can come in many different forms,” says Bryan Kuderna, a certified financial planner in Shrewsbury, New Jersey, and host of “The Kuderna Podcast.”

[Read: 2026 Guide: Pros and Cons of Annuities]

Types of Retirement Annuities

Here is a look at the different types of annuities, including how they generate returns and provide income.

Fixed Annuity

A fixed annuity offers a guaranteed interest rate or predictable payout. This can appeal to retirees or conservative investors who prioritize stability over market exposure.

Because fixed annuities share some characteristics with other low-risk savings and income products, they are often compared with certificates of deposit and bonds when evaluating liquidity and access to funds.

“Fixed annuities may have surrender charges if the client liquidates their annuity before the term is up, whereas CDs might have early withdrawal penalties,” Kuderna says. “Bonds may not have a penalty, but their redemption value is often based on prevailing rates.”

Variable Annuity

A variable annuity invests in market-based subaccounts, which are investment options inside an annuity that function similarly to mutual funds and may hold stocks, bonds or other assets. Returns and future income depend on the performance of those underlying investments.

These products may offer higher upside potential, but they can also come with higher fees, particularly if optional riders for guaranteed income or death benefits are included.

These products may offer higher upside potential, but they can also carry more fees, particularly if optional riders or death benefits are included.

Fixed Indexed Annuity

A fixed indexed annuity links its returns to the performance of a market benchmark, such as the S&P 500 index, rather than investing directly in the market. It typically offers some downside protection, meaning there is a minimum guaranteed return floor even if the index performs poorly.

Registered Index-Linked Annuity

Registered index-linked annuities, or RILAs, combine features of variable and indexed annuities.

A RILA is tied to market performance but uses guardrails to limit some downside exposure. In exchange, investors may accept capped gains or structured risk.

RILAs may appeal to investors who want some exposure to market gains but with more built-in protection than investing directly in the stock market.

Multi-Year Guaranteed Annuity

A multi-year guaranteed annuity, or MYGA, is a fixed annuity that locks in a guaranteed interest rate for a set term, often three to 10 years. This type of annuity may have surrender charges and specific liquidity rules.

Immediate Annuity

An immediate annuity begins paying income soon after a lump-sum investment, often within 30 days to 12 months.

Retirees may turn to immediate annuities if they want dependable income for life or over a fixed period.

Deferred Annuity

A deferred annuity delays income payments until a future date. This allows funds to accumulate before withdrawals begin.

Types of Annuities Compared

Type of Annuity Typical Use Case Rate/Return Structure Liquidity Best For
Fixed annuity Stability and guaranteed growth Fixed interest rate Moderate to limited Conservative savers
Variable annuity Long-term growth Market-based returns Limited Higher-risk investors
Fixed indexed annuity Protected growth Index-linked with caps Limited Moderate-risk investors
RILA Structured market exposure Index-linked with guardrails Limited Investors comfortable with partial downside risk
MYGA CD alternative Guaranteed rate for set term Limited Short- to mid-term conservative savers
Immediate/income annuity Retirement income Guaranteed payouts Low Retirees needing dependable income
Deferred annuity Long-term growth Delayed payments Limited Investors focused on savings growth before income begins

Benefits of a Retirement Annuity

Annuities can help transfer some retirement risks

to an insurance company.

For retirees concerned about outliving their savings, guaranteed lifetime income can provide financial stability. Some investors also use annuities to diversify beyond traditional stock-and-bond portfolios.

Tax deferral is another advantage. In many cases, gains within an annuity are not taxed until distributions begin.

[Read: What Is a Good Monthly Income in Retirement?]

Drawbacks of a Retirement Annuity

Annuities can be complex and often involve fees and restrictions.

Some products, especially variable annuities, may include administrative fees, rider charges and investment-related costs.

Liquidity can also be an issue. If you may need access to capital for emergencies or flexibility, an annuity may not always be the right fit.

Annuities Inside 401(k)s Under SECURE 2.0

For many workers, 401(k) plans may be their first introduction to annuities.

Under the SECURE 2.0 Act and earlier retirement-plan changes, annuity options have appeared in more employer-sponsored retirement plans. While workers may consider these, it is also necessary to understand fees, payout structures and whether the annuity aligns with their retirement strategy.

Questions to Ask Before Buying an Annuity

Before purchasing an annuity, ask:

— What financial goal is this annuity helping achieve?

— How long is the surrender period?

— What fees or rider costs apply?

— How easily can I access my money?

— Is the annuity designed for growth, income or preservation?

— What happens if interest rates change?

— How financially strong is the insurance company?

— Would another option, such as bonds, CDs or diversified investments, also help me reach my goal?

[READ: 10 Essential Sources of Retirement Income]

Are Annuities a Good Investment for Retirees?

Whether an annuity is a good fit depends on a retiree’s unique goals, risk tolerance, liquidity needs and retirement timeline.

“The most important thing a prospective annuity client should understand before signing is the term of the annuity and any associated surrender schedule,” Kuderna says. “This is where retirees can run into issues if they lock up significant assets and lose liquidity for unexpected emergencies. They should also be aware of any fees, particularly on variable and index annuities or any with income riders attached. ”

One of the best ways to evaluate whether an annuity belongs in your retirement plan is to determine what purpose it would serve. If it supports a need such as guaranteed income, it may be useful. If not, another option could be a better fit.

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What Is a Retirement Annuity? originally appeared on usnews.com

Update 06/02/26: This story was published at an earlier date and has been updated with new information.

A young mother’s killing went unsolved for nearly 40 years. Then the phone rang

By CNN
(CNN) — Melissa “Missy” Taylor Ellison’s killing remained a mystery for decades after she was found dead in her bedroom and her 13-month-old daughter was left crying in the living room.For years, Casie Ellison said she felt like she had to shrink herself and bury her feelings about the death of her mother.About 25 years after her mother was killed, those emotions were brought out when Casie realized her own daughter was now the same age she was when her mother died.“It just took me understanding that this is a little Casie,” she said. “I was seeing myself.”On July 8, more than 38 years after her mother’s killing in Jacksonville, Florida, the Clay County Sheriff’s Office received a call from a man wanting to come forward with information on a cold case.Gary Glowacz, a 70-year-old man from Middleburg, Florida, told a Clay County sergeant he wanted to “set things straight” on the death of 20-year-old Melissa Ellison, saying he had hit her with a log in search of money during a burglary, according to his arrest report.Glowacz told Jacksonville Sheriff’s Office Cold Case Unit detectives that in March he came across an article detailing Melissa Ellison’s case and realized he was responsible for her death, according to his arrest report.Glowacz was charged with second-degree murder and armed burglary with assault or battery, according to charging documents. His attorney and the district attorney declined to comment.He’s being held without bond in the Duval County Jail, and his next court appearance is set for Thursday.No arrests were made during the initial investigation in connection with Melissa Ellison’s killing, according to the arrest report.The night of her deathOn December 28, 1987, Melissa Ellison, who was known as Missy Taylor by her family and friends, was found dead in her bedroom by her two roommates, the arrest report says.The medical examiner’s office ruled the manner of death as a homicide and the cause of death to be blunt force trauma to the head at the time of the killing, according to the arrest report.Glowacz told detectives he was looking for money or items to sell to buy drugs, according to the arrest report detailing their interview with him. Glowacz lived only half a mile away from the home Melissa Ellison was living in, according to law enforcement databases. He was arrested on suspicion of a separate burglary the same day she was found dead, the arrest report says.Glowacz, who was 31 at the time, breached the home through a window and made his way into Melissa Ellison’s bedroom, where he found her lying on the bed with her daughter Casie, according to the arrest report. Using a log he found in the house, he struck her one time on the head by her neck, he told detectives. He then picked Casie up, placed her on the couch in the living room and went back into the bedroom to look for money under her mattress.In the arrest report, detectives noted Glowacz recounted details of the crime scene that were not released and were not included in the article he saw earlier this year.When asked why he was confessing to the killing decades later, he said that he was not aware the victim had died until he saw the article about the case.Casie Ellison said she was the first call detectives made that night after they arrested Glowacz.“It felt exactly how I was hoping that it would feel every time I imagined that it would be possible,” Casie Ellison said.Casie Ellison’s aunts Glenda Blandford and Sissy Bennett, who were 17 and 15 respectively at the time of their sister’s death, were the next two calls made.“I knew in my heart, I knew in the back of my mind that this is it. Something’s happened,” Bennett said of the moment she got the phone call.The case was unsolved for decadesBlandford and Bennett recount the heartache their family went through after their sister’s death. For years, their parents would chase any lead they could find, bringing it to the Jacksonville Sheriff’s Office to investigate, but to no avail, they said.“I carried my mother so many times down to the sheriff’s office. I watched everything that she went through, and I had to be the stronger one because … I had to be there for her while my dad continued to work,” Blandford said. “And I watched every disappointment, I watched every ounce of hope.”In 2019, their mother, Catherine Taylor, died not knowing what happened the night her daughter Melissa was killed.A year earlier, a friend of Bennett’s submitted Melissa Ellison’s case to Project: Cold Case, a nonprofit that provides support to families of unsolved homicide victims. The organization created a site for her story with all the information the family had gathered over the years.In January 2026, six months before Glowacz confessed to the killing, Project: Cold Case and Ellison’s family were part of a news conference with First Coast Crime Stoppers.“Someone knows exactly what happened that night. Someone remembers a detail that has never been spoken,” Casie Ellison said at the January news conference. “Someone has lived with this knowledge for nearly four decades. And someone listening to this right now knows that this is about them.”The Jacksonville Sheriff’s Office credited the January news conference for aiding in the investigation, adding that some information that came forward played a role in the recent arrest, it said in July.“While his arrest cannot fill the enormous void left in the hearts of Melissa Ellison’s loved ones, I hope that this arrest is another step in the healing process,” Sheriff T.K. Waters said in July.Remembering MissyAfter nearly 40 years of no answers, this arrest might seem like it would be a weight lifted off the family’s shoulders, but Blandford, Bennett and Casie Ellison say they don’t feel relief yet.Both Blandford and Bennett said there isn’t a day that goes by when they don’t think of their sister. When Blandford moved to the beach five years ago, she thought of Missy, who loved the beach. She’s memorialized in the purple “Reign” Jeep Wrangler Bennett purchased because of Missy’s favorite song, “Purple Rain” by Prince. She lives on through Casie Ellison, who has three children of her own now.The journey toward healing continues for the family, as they try to navigate the new feelings that come with the recent developments. For Casie Ellison, this case has been her whole life.“There was no ‘before the incident’ for me,” Casie Ellison said.For the family, the loss has extended beyond losing Missy. The family lost three other relatives after her death.“I don’t know if justice would ever be officially served,” Casie Ellison said. “There’s been so much loss just from the grief and the no answers of this being such a long process. I think maybe had it been sooner, especially when my grandma was alive, and she would have been able to see there be some type of wrap to this in her lifetime, it might be a different answer.”Before finding out about Glowacz’s arrest, the family was planning a remembrance party for Missy with all her loved ones. Blandford says the party is still planned, but with a renewed prayer.“We’re still praying for justice,” Blandford said. “(We) pray and beg that God sheds serious light on this case and gives guidance to the hands of all the detectives … and that this case gets its proper justice, because right now, we’re sitting on an arrest, not justice.”The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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